Brazilian Swap Rates Climb on Inflation Outlook; Real Declines

By Blake Schmidt -
Jun 24, 2013

Brazil’s longer-term swap rates rose
after analysts surveyed by the central bank raised their
inflation forecasts, adding to speculation that policy makers
will sustain the pace of increases in borrowing costs.

Swap rates due in January 2016 climbed four basis points,
or 0.04 percentage point, to 11.32 percent at 10:03 a.m. in Sao
Paulo. The real depreciated 0.4 percent to 2.2508 per U.S.
dollar after falling on June 20 to 2.2575, the weakest level
since April 2009.

“The general expectation is that they’ll hike more because
of what’s happening with the exchange rate,” Tony Volpon, the
head of research for the Americas at Nomura Holdings Inc., said
in a phone interview from New York.

About 100 economists in a weekly central bank survey
published today raised their median forecast for year-end
inflation to 5.86 percent from 5.83 percent